Steps to creating 11 million jobs

May 1 2012 at 02:46pm
By Trueman Goba

Matthew JordaanThe NPC favours a more responsive labour market that will create jobs, says the writer

SA needs to grow its economy by 5.4 percent a year over the next 20 years and create about 11 million new jobs if the broad goal of the National Development Plan – a prosperous, equal society by 2030 – is to be met.

This will require better education, a healthier population, better located and maintained infrastructure, a sound social safety net, a capable state and much lower levels of corruption.

Growth of 5.4 percent will mean the rate of investment to GDP needs to rise to reach 30 percent by 2030. This can be achieved through an increasing pool of savings and foreign capital. But to unlock our growth potential, the National Planning Commission (NPC) argues that over and beyond better energy generation and distribution; urban planning approval processes; water supply and waste water management; telecommunications; and licensing for water, minerals and environmental permits; we also need to develop our workforce.

Earnings need to be sufficient to ensure a decent standard of living but also be realistic from the standpoint of long-term competitiveness. This means creating a stable and constructive environment in which bargaining and labour relations both support investment and protect human rights. The NPC favours a more responsive labour market that helps to create jobs, raise living standards and reduce inequality. This is not an easy balance to strike.

The proposals on the labour market include, among others, improving access to lifelong learning and career advancement; stabilising labour relations by improving dispute resolution and shop-floor relations; strengthening the labour courts; and reviewing regulation and standards for small and medium enterprises.

The most important task is to strengthen the accessibility and effectiveness of post-school training. This must be coupled with labour market policies that help to match job seekers and employers, and bring down the cost of searching for and starting work.

The NPC proposes driver training for school leavers, for instance, and a tax subsidy to employers to reduce the initial cost of hiring youths entering the labour market.

We believe there should be subsidies to help prepare matric graduates for work and place them into work opportunities.

One of the commission’s concerns is the wasted opportunity of so many young people not working. We are squandering our greatest resource – our young people. When people are out of work, they have no opportunity to develop and enhance their capabilities. That is why we propose a dual approach that focuses both on developing skills and making it easier to get that first job.

However, recognising that there will always be some skills shortages, we propose adopting a more open approach to skilled immigration. It is shortsighted to keep out skilled people who could contribute to economic growth and job creation.

Furthermore, given that by 2030, some 90 percent of jobs will be created in small and expanding firms, regulatory reform for small, medium and micro enterprises (SMMEs) and a package of support measures could help to boost mass entrepreneurship.

Export growth is critical to boosting employment.

Economic participation in rural areas will need to rise from 29 percent to 40 percent, which can be achieved through reforming land tenure; support to farmers; expanding social services; higher agricultural output; mining; social investment; and tourism.

The commission realises that none of these objectives can be achieved if there is not a long-term commitment by all sectors of society. Policy certainty is critical. The government will need to strengthen its role as a service provider; as the core provider of public goods (such as infrastructure and other public services); as an economic regulator; as a consumer; and as a critical player in giving leadership.

At the same time, there is a need to improve trust between the public and private sectors. We need to ensure that the private sector is treated as a partner in policy design and implementation, and that the private sector responds to and facilitates the realisation of national objectives.

l Trueman Goba is a commissioner with the National Planning Commission.